Category Archives: CFPB

CFPB Action to Require Citizens Bank to Pay $9 Million Penalty for Unlawful Credit Card Servicing

FOR IMMEDIATE RELEASE:
May 23, 2023

CONTACT:
Office of Public Affairs
press@cfpb.gov

CFPB Action to Require Citizens Bank to Pay $9 Million Penalty for Unlawful Credit Card Servicing

Citizens failed to properly manage and respond to customers’ credit card disputes and fraud claims

WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) reached a settlement to resolve allegations that Citizens Bank violated consumer financial protection laws and rules that protect individuals when they dispute credit card transactions. The CFPB alleges that Citizens Bank failed to properly manage and respond to customers’ credit card disputes and fraud claims. If entered by the court, the order, among other things, would require Citizens Bank to pay a $9 million civil money penalty.

“Federal law provides important rights to credit cardholders when disputing transactions and resolving billing errors,” said CFPB Director Rohit Chopra. “As outstanding credit card debt approaches $1 trillion, the CFPB will be closely watching the conduct of the credit card industry.”

Citizens Bank is a large bank headquartered in Providence, Rhode Island, with branches and ATMs in 14 states and the District of Columbia. Citizens Bank is a subsidiary of Citizens Financial Group (NYSE:CFG), which reported $222 billion in assets as of March 31, 2023, and is one of the 15 largest consumer banks in the country. The CFPB originally sued Citizens Bank in January 2020.

Federal law protects individuals from credit card billing errors and fraud. The Truth in Lending Act and the rules that implement it lay out specific steps that individuals must take to report credit card disputes and fraud claims. If a person reports a billing error or fraud, the credit card issuer is required to investigate the allegations, send certain notifications to the individual, and, when claims are valid, refund the error or fraud amount.

In the 2020 lawsuit, the CFPB alleges that Citizens Bank violated the Truth in Lending Act and its implementing Regulation Z by:

  • Improperly denying customer reports of fraud and errors and failing to provide refunds: The bank failed to reasonably investigate and resolve billing error notices and claims of unauthorized use by making customers jump through unnecessary and burdensome hoops, which are not required under the Truth in Lending Act, to report fraud. The bank also failed to fully credit customers’ accounts when unauthorized use and billing errors occurred by sometimes not refunding all finance charges or fees owed to customers.
  • Failing to provide required documents and referrals: The bank did not provide certain individuals who submitted billing error notices with required acknowledgment and denial notices, which inform them that their disputes have been received and, if applicable to a person’s case, that the dispute was denied. The bank also did not disclose required credit counseling information to individuals who called the bank’s toll-free number designated for that purpose, and instead routed some individuals to the bank’s collections department.

Enforcement Action

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial protection laws. If entered by the court, the stipulated judgment and order would require Citizens Bank to:

  • Fix its credit card practices: Citizens Bank must ensure that the treatment, handling, and resolution of billing error notices and unauthorized use claims comply with the law, including prohibiting its employees from requiring customers to provide a fraud affidavit signed under penalty of perjury in support of a credit card claim. The bank must also ensure that it refunds any fees or other amounts, calculated from the date of the error or unauthorized use, in response to valid billing error notices and unauthorized use claims.
  • Pay a $9 million fine: The bank will pay a $9 million penalty to the CFPB’s victims relief fund.

Read today’s proposed stipulated judgment and order.

Learn more about the CFPB’s credit card resources.

Learn more about frauds and scams.

Consumers can submit complaints about credit card servicing and other financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who believe their companies have violated federal consumer financial protection laws, including the Truth in Lending Act, are encouraged to send information about what they know to whistleblower@cfpb.gov. To learn more about reporting potential industry misconduct, visit the CFPB’s website.

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The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit consumerfinance.gov.

CFPB Enhances Tool to Promote Competition and Comparison Shopping in Credit Card Market

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FOR IMMEDIATE RELEASE:
March 21, 2023

CONTACT:
Office of Public Affairs
press@cfpb.gov

CFPB Enhances Tool to Promote Competition and Comparison Shopping in Credit Card Market

Price transparency will help families find better credit card deals in a time of rising interest rates
WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) launched an improved survey of credit card issuers that can help consumers and families compare interest rates and other features when shopping for a new credit card. Americans pay $120 billion in credit card interest and fees each year, which contributes to the almost trillion dollars in nationwide household credit card debt. In the current high-rate environment, it is important for Americans to be able to be able to accurately compare products. Upgrades to the CFPB’s terms of credit card plans survey are designed to increase price competition in the credit card market by allowing people to comparison shop for the best prices and products. The survey will also help smaller credit card issuers, who often offer the lowest rates, reach comparison shoppers.

“Given the rise in interest rates, the CFPB has modernized how it collects credit card data to spur competition and help families use products with lower rates and fees,” said CFPB Director Rohit Chopra. “These improvements will also give smaller relationship banks that offer better terms and better service another way to compete against the dominant credit card companies.”

The improvements to the CFPB’s semiannual terms of credit card plans survey are intended to create a neutral data source to help consumers find the best interest rates and products. Currently, consumers can run into many obstacles when shopping for credit cards, including that many big issuers make it difficult for consumers to estimate the interest rate they will pay. The data from the survey also can power digital tools and websites that people can use to find the best products for them, regardless of company size or marketing budget.

For the terms of credit card plans survey, the CFPB collects and makes public the product data on credit cards from the largest 25 issuers and from a sample of at least 125 additional issuers. The goal of the refreshed survey is to provide people with more realistic and practical information to use when comparison shopping for a credit card. The survey will also expand the number of issuers included. Specifically, financial institutions that are not part of the top 25 nor are part of the 125 sampled issuers will be able to voluntarily submit information about their credit card products.

Beginning this week, credit card issuers will start reporting more details on the types of credit card plans they offer. The refresh of the CFPB’s terms of credit card plans survey includes updates that will help consumers easily identify:

Lower interest rates: With credit card interest rates rising above 20% in 2023, even small percentage changes can have outsized effects on household finances. While financial institutions with relationship banking models often offer lower credit card interest rates, they can also struggle to compete with larger issuers. The changes to the CFPB’s survey will provide them the opportunity to share more information to consumers about their credit card offerings and allow them to compete with bigger players.
Realistic interest rates: The survey will ask additional questions about a credit card’s annual percentage rate (APR). If a card’s APR varies by credit score, issuers will need to report the minimum and maximum APR offered, as well as the median APR offered by certain credit score tiers. People often have a general idea of their credit scores, so seeing the median APR for their range will allow them to better compare APRs across products and estimate the potential cost of borrowing before they apply.
Credit card products that best fit their needs: The top 25 credit card issuers will have to answer questions for all their credit cards instead of just their most popular products. All other institutions will be able to voluntarily submit information about multiple products. Questions will also expand the amount of information gathered about each card. For example, there is a new question on whether the product is a secured card or requires a deposit for account opening. There are also questions about promotional terms of balance transfers, introductory rates, and cash advances.
The Fair Credit and Charge Card Disclosure Act of 1988 requires the semi-annual collection of data from the largest 25 issuers of credit cards and at least 125 additional institutions in a manner that ensures equitable geographic distribution within the sample and representation of a wide spectrum of institutions. The results of the semiannual terms of credit card plans survey are a key tool to facilitate credit card shopping by consumers and to enhance competition.

For more information on the survey, visit the terms of credit card plans survey website.

Consumers can submit complaints about financial products or services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

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The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit consumerfinance.gov.

2022 HMDA Data on Mortgage Lending Now Available

FOR IMMEDIATE RELEASE:
March 20, 2023

CONTACT:
Office of Public Affairs
press@cfpb.gov

2022 HMDA Data on Mortgage Lending Now Available

WASHINGTON, D.C. — The Home Mortgage Disclosure Act (HMDA) Modified Loan Application Register (LAR) data for 2022 are now available on the Federal Financial Institutions Examination Council’s (FFIEC) HMDA Platform for approximately 4,394 HMDA filers. The published data contain loan-level information filed by financial institutions and modified to protect consumer privacy.

To increase public accessibility, the annual loan-level LAR data for each HMDA filer are now available online. Previously, users could obtain LAR data only by making requests to specific institutions for their annual data. To allow for easier public access to all LAR data, the Consumer Financial Protection Bureau’s (CFPB) 2015 HMDA rule made the data for each HMDA filer available electronically on the FFIEC’s HMDA Platform. This year, in addition to institution-specific modified LAR files, users can download one combined file that contains all institutions’ modified LAR data.

Later this year, the 2022 HMDA data will be available in other forms to provide users insights into the data. These forms will include a nationwide loan-level dataset with all publicly available data for all HMDA reporters; aggregate and disclosure reports with summary information by geography and lender; and access to the 2022 data through the HMDA Data Browser to allow users to create custom datasets, reports, and data maps. The CFPB will later also publish a Data Point article highlighting key trends in the annual data.

HMDA users may find the CFPB’s Beginner’s Guide to Accessing and Using HMDA Data useful for background on HMDA and tech tips for understanding and analyzing the data.

The 2022 HMDA Loan Application Register data can be found on the FFIEC’s HMDA platform: https://ffiec.cfpb.gov/data-publication/modified-lar.

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The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit consumerfinance.gov.

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CFPB Heightens Scrutiny of Unlawful Collection of Payments on Discharged Student Loans

FOR IMMEDIATE RELEASE:
March 16, 2023

CONTACT:
Office of Public Affairs
press@cfpb.gov

CFPB Heightens Scrutiny of Unlawful Collection of Payments on Discharged Student Loans
CFPB examiners found servicers engaging in unfair practices in trying to collect on loans discharged in bankruptcy

WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) released a bulletin warning servicers of their obligation to halt unlawful conduct with respect to private student loans that have been discharged by bankruptcy courts. The bulletin details recent findings by CFPB examiners that certain loan servicers were illegally returning loans to collections after bankruptcy courts had discharged the loans. The CFPB is directing these servicers to return illegally collected payments to affected consumers and immediately cease these unlawful collection tactics. The bulletin also makes clear that the CFPB will continue to examine student loan servicers’ handling of these loans to detect whether these illegal practices persist at other companies.

“When a court orders the discharge of a loan, lenders and servicers should not treat this as a suggestion,” said CFPB Director Rohit Chopra. “The CFPB has found that some servicers are ignoring bankruptcy court orders. The student loan servicing industry should ensure that their collection practices are compliant with the law.”

Warning Servicers Against Collecting Discharged Debt

The bulletin details unfair practices observed by CFPB examiners in reviews of the way certain student loan servicers handled private loan accounts when consumers received loan discharges through bankruptcy court orders. The bulletin also makes clear that the CFPB will continue to examine servicer handling of these loans, and puts the servicing industry on notice that the CFPB intends to take action where it finds that servicers are collecting on debts that have been discharged.

Although many student loans are subject to an “undue hardship” standard and require a separate proceeding to be discharged in bankruptcy, some private student loans can be discharged in a standard bankruptcy proceeding, just like most other unsecured consumer debts. For this subset of private student loans, a bankruptcy discharge order eliminates the consumer’s debt.

Some examples of student loans eligible for standard bankruptcy discharge include:

Loans made to attend schools that are not eligible to receive U.S. Federal student aid, such as unaccredited schools and foreign schools (“non-Title IV schools”)
Loans to students attending school less than half-time
Loans made in amounts in excess of the cost of attendance, which are often disbursed directly to the borrower, instead of the school
Loans made to cover fees and living expenses incurred while studying for the bar exam or other professional exams
Loans made to cover fees, living expenses, and moving costs associated with medical or dental residency
Other loans made for non-qualified higher education expenses
Unfair Practices in Collecting Discharged Student Loans

CFPB examiners identified student loan servicers who failed to distinguish between education loans that are discharged in a standard bankruptcy proceeding and loans that are not. As a result, servicers improperly sought to collect on loans that had been discharged by bankruptcy courts. The CFPB found that, when faced with continued collection activities in violation of bankruptcy court orders, many borrowers continued to make payments, sometimes paying thousands of dollars on debts that they no longer owed. These supervisory findings build on previous work from 2014, when the CFPB found that student loan servicers deceptively told borrowers that their loans were not dischargeable in bankruptcy even though the Bankruptcy Code does allow for discharge.

The CFPB intends to continue to hold industry accountable for these illegal collection practices. The CFPB expects servicers to proactively identify student loans that are discharged via standard bankruptcy orders, permanently cease collections, and refund any consumers who have been affected by unlawful collections in the past.

Read today’s bulletin, Unfair Billing and Collection Practices After Bankruptcy Discharges of Certain Student Loan Debt.

Consumers having an issue with a consumer financial product or service can submit a complaint with the CFPB online or by calling (855) 411-CFPB (2372).

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The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit consumerfinance.gov.

Consumer Financial Protection Bureau · 1700 G Street, N.W. · Washington, D.C. 20552
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CFPB ISSUES CREDIT REPORTING GUIDANCE DURING COVID-19 PANDEMIC

FOR IMMEDIATE RELEASE:
April 1, 2020

MEDIA CONTACT:
Office of Communications
Tel: (202) 435-7170

CFPB ISSUES CREDIT REPORTING GUIDANCE DURING COVID-19 PANDEMIC

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (Bureau) today released a policy statement outlining the responsibility of credit reporting companies and furnishers during the COVID-19 pandemic.  In response to the pandemic, many lenders are being flexible when it comes to consumers’ making payments.  The Bureau’s statement underscores that consumers benefit if lenders report accurate information about these arrangements to credit bureaus so that the credit reports of consumers are accurate.

“During this time of uncertainty, we are providing clarity to ensure the consumer reporting industry can continue to function,” said Director Kraninger.  “Consumers rely on their credit report to purchase a new car, their new home, or to finance their college education.  An effective consumer reporting system is critical in promoting fair and efficient access to credit in the consumer financial services market.”

As lenders continue to offer struggling borrowers payment accommodations, Congress last week passed the CARES Act.  The Act requires lenders to report to credit bureaus that consumers are current on their loans if consumers have sought relief from their lenders due to the pandemic.  The Bureau’s statement informs lenders they must comply with the CARES Act.  The Bureau’s statement also encourages lenders to continue to voluntarily provide payment relief to consumers and to report accurate information to credit bureaus relating to this relief.  The continuation of reporting such accurate payment information produces substantial benefits for consumers, users of consumer reports, and the economy as a whole.

In addition, in response to staffing and resources constraints on lenders and credit bureaus due to the pandemic, the Bureau’s statement also provides flexibility for lenders and credit bureaus in the time they take to investigate disputes.   The Bureau specifically states that it does not intend to cite in an examination or bring an enforcement action against firms who exceed the deadlines to investigate such disputes as long as they make good faith efforts during the pandemic to do so as quickly as possible.

Earlier this month, the Bureau provided consumers with resources to protect their credit.  The Bureau’s blog outlines the steps consumers should take if they cannot make a payment, how to dispute inaccurate information on their credit report, and how to obtain a free copy of their credit report.  The blog can be found here.

Statement on Supervisory and Enforcement Practices Regarding the Fair Credit Reporting Act and Regulation V in Light of the CARES Act.

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The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations, by making rules more effective, by consistently enforcing federal consumer financial law, and by empowering consumers to take more control over their economic lives.  For more information, visit consumerfinance.gov.

CFPB PROVIDES FLEXIBILITY DURING COVID-19 PANDEMIC

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FOR IMMEDIATE RELEASE:
March 26, 2020

MEDIA CONTACT:
Office of Communications
Tel: (202) 435-7170

CFPB PROVIDES FLEXIBILITY DURING COVID-19 PANDEMIC

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (Bureau) today announced that it is providing needed flexibility to enable financial companies to work with customers in need as they respond to the COVID-19 pandemic. The Bureau is postponing some data collections from industry on Bureau-related rules to allow companies to focus on responding to consumers in need and making changes to its supervisory activities to account for operational challenges at regulated entities.

“As consumers seek temporary relief from lenders, the pandemic is impacting the operations of financial companies that are eager to help their customers during this unprecedented time,” said Director Kathleen L. Kraninger. “Our actions today are temporary and targeted to support consumers by allowing financial companies to focus their resources on assisting consumers.

“The Bureau, along with our state and federal partners, have released prior guidance encouraging financial institutions to work constructively with borrowers and other customers affected by COVID-19 to meet their financial needs. We will continue to issue additional guidance and policies to facilitate the ongoing collaborative relationship between companies and their customers during this time,” concluded Director Kraninger.

The Bureau will not expect quarterly information reporting by certain mortgage lenders as required under the Home Mortgage Disclosure Act (HMDA) and Regulation C. During this time, entities should continue collecting and recording HMDA data in anticipation of making annual submissions. The Bureau will provide information on when and how institutions will be expected to commence what would have been new quarterly HMDA data submissions.

The Bureau also will not expect the reporting of certain information related to credit card and prepaid accounts under the Truth in Lending Act, Regulation Z, and Regulation E. This includes the annual submissions concerning agreements between credit card issuers and institutions of higher education; quarterly submission of consumer credit card agreements; collection of certain credit card price and availability information; and submission of prepaid account agreements and related information.

Additionally, the following data collections are being postponed:

a survey of financial institutions that seeks information on the cost of compliance in connection with pending rulemaking on Section 1071 of the Dodd-Frank Act; and
a survey of firms providing Property Assessed Clean Energy financing to consumers for the purposes of implementing Section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act.

To the extent the submission of this information is required by law, the Bureau is issuing policy statements indicating that it does not intend to cite in an examination or initiate an enforcement action against any entity for failure to submit such information when required. The Bureau will notify entities at a later date of when and how to submit information under these requirements. Entities should maintain records sufficient to allow them to make delayed submissions pursuant to Bureau guidance.

The Bureau also announced that as a result of operational challenges confronted by institutions due to the pandemic, the Bureau will work with affected financial institutions in scheduling examinations and other supervisory activities to minimize disruption and burden. When conducting examinations and other supervisory activities and in determining whether to take enforcement action, the Bureau will consider the circumstances that entities may face as a result of the COVID-19 pandemic and will be sensitive to good-faith efforts demonstrably designed to assist consumers.

Statement on Supervisory and Enforcement Practices Regarding Quarterly Reporting Under the Home Mortgage Disclosure Act: https://files.consumerfinance.gov/f/documents/cfpb_hmda-statement_covid-19_2020-03.pdf.

Statement on Supervisory and Enforcement Practices Regarding Bureau Information Collections for Credit Card and Prepaid Account Issuers: https://files.consumerfinance.gov/f/documents/cfpb_data-collection-statement_covid-19_2020-03.pdf.

Statement on Bureau Supervisory and Enforcement Response to COVID-19 Pandemic: https://files.consumerfinance.gov/f/documents/cfpb_supervisory-enforcement-statement_covid-19_2020-03.pdf.

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The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations, by making rules more effective, by consistently enforcing federal consumer financial law, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.

Consumer Financial Protection Bureau · 1700 G Street, N.W. · Washington, D.C. 20552
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